Pohnpei Arts & Crafts, Inc. v Narruhn [2017] FMSC 38; 21 FSM R. 366 (Pon. 2017) (9 October 2017)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2016-024

POHNPEI ARTS & CRAFTS, INC., )
)
Plaintiff, )
)
vs. )
)
ALEXANDER R. NARRUHN, Administrator, FSM )
Social Security Administration, NAKAMA SANA, )
Chairman, Board of Trustees, FSM Social )
Security Administration, FSM SOCIAL SECURITY )
ADMINISTRATION, MICHAEL J. SIPOS, and )
KENSTER SALVADOR, )
)
Defendants. )
_____________________________________________ )

ORDER GRANTING SUMMARY JUDGMENT

Larry Wentworth
Associate Justice

Hearing: August 8, 2017
Decided: October 9, 2017

APPEARANCES:

For the Plaintiff: Yoslyn G. Sigrah, Esq.
P.O. Box 3018
Kolonia, Pohnpei FM 96941

For the Defendants: Michael J. Sipos, Esq.
P.O. Box 2069
Kolonia, Pohnpei FM 96941

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HEADNOTES

Jurisdiction Subject-Matter
Subject-matter jurisdiction is addressed first because, if the court lacks it, any ruling it makes on other issues would be an advisory opinion (obiter dicta), and the court is not empowered to make advisory opinions. Pohnpei Arts & Crafts, Inc. v. Narruhn, 21 FSM R. 366, 368 (Pon. 2017).

Constitutional Law Case or Dispute Standing
An entity that claims to own certain property has standing to sue another for what it perceives as wrongful interference with its rights in that property. Pohnpei Arts & Crafts, Inc. v. Narruhn, 21 FSM R. 366, 368 (Pon. 2017).

Business Organizations Corporation; Foreign Investment Laws
A corporation’s legal inability to engage in business on Pohnpei is not a legal impediment to its ability to own personal property on Pohnpei, although its inability to legally conduct business on Pohnpei could be a persuasive indication that any equipment used to conduct a Pohnpei business was, in fact, not owned by it, but owned by another. Pohnpei Arts & Crafts, Inc. v. Narruhn, 21 FSM R. 366, 368 (Pon. 2017).

Civil Procedure Dismissal Before Responsive Pleading; Civil Procedure Summary Judgment
When, on a motion to dismiss for the failure to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion must be treated as one for summary judgment and disposed of as per Rule 56. Pohnpei Arts & Crafts, Inc. v. Narruhn, 21 FSM R. 366, 369 (Pon. 2017).

Civil Procedure Collateral Estoppel
Collateral estoppel is a judgment’s binding effect as to matters actually litigated and determined in one action on later controversies between the parties involving a different claim from that on which the original judgment was based, and it is a doctrine barring a party from relitigating an issue determined against that party in an earlier action, even if the second action differs significantly from the first one. Pohnpei Arts & Crafts, Inc. v. Narruhn, 21 FSM R. 366, 369 (Pon. 2017).

Civil Procedure Collateral Estoppel
A litigant that has previously litigated and lost its claim to a legal interest in certain property is collaterally estopped from claiming damages as a result of loss of ownership or possession of the property because, under the principle of collateral estoppel, a cause of action which could have been litigated in the course of the original case between the same parties is treated as litigated and decided with the former cause of action. Pohnpei Arts & Crafts, Inc. v. Narruhn, 21 FSM R. 366, 369 (Pon. 2017).

Civil Procedure Collateral Estoppel
When rights to the property sought returned have already been adjudicated in an action and the plaintiff’s claim was found deficient, collateral estoppel bars the plaintiff’s claims against the same adversary in a new case, and when all of the plaintiff’s claims against other defendants are dependent on it succeeding on its claim against the original adversary, the plaintiff, as a matter of law, cannot succeed on those derivative claims even though the second action differs significantly from the first. Pohnpei Arts & Crafts, Inc. v. Narruhn, 21 FSM R. 366, 370 (Pon. 2017).

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COURT’S OPINION

LARRY WENTWORTH, Associate Justice:

This came before the court on August 8, 2017, to hear the defendants’ Motion to Dismiss Complaint for Failure to State a Claim upon Which Relief May Be Granted and for Lack of Subject Matter Jurisdiction, with supporting exhibits, filed November 21, 2016, and the Plaintiff’s Opposition to Defendants’ Motion to Dismiss Complaint with Exhibit A, filed February 8, 2017. Based on the parties’ filings and their oral presentations, the defendants are granted summary judgment. The reasons follow.

I. BACKGROUND

The plaintiff, Pohnpei Arts & Crafts, Inc., alleges that the defendants, on January 12 and 13, 2017, wrongfully seized its property when the defendants executed, or assisted in the execution of, a writ of execution that sought to enforce an FSM Social Security Administration judgment against Roslyn Reyes doing business as Pohnpei Arts & Crafts, a sole proprietorship. The plaintiff contends that it was not a party to or a subject of the lawsuit which gave rise to the money judgment against Reyes and that therefore its business equipment should not have been seized. In the plaintiff’s view, the defendants are tortiously liable to it for conversion; violations of laws governing executions and thus violation of due process; gross negligence by those supervising, or those who should have supervised, the execution; and interference with business relations and lost profits. The plaintiff seeks the seized property’s return, orders barring further interference with its business, and various monetary damages.

The defendants move to dismiss the complaint asserting that the court lacks subject-matter jurisdiction over it and that it fails to state a claim for which the court can grant relief.

II. SUBJECT-MATTER JURISDICTION

The defendants contend that there is no case or dispute between them and the plaintiff so therefore the plaintiff has no standing to sue, and since the plaintiff has no standing, the court has no subject-matter jurisdiction over the case and must, under Civil Procedure Rule 6(b)(1), dismiss the case. This issue is addressed first because, if the court lacks subject-matter jurisdiction, any ruling it makes on other issues would be an advisory opinion (obiter dicta), and the court is not empowered to make advisory opinions. See Tilfas v. Heirs of Lonno, 21 FSM R. 51, 56 (App. 2016); Kosrae v. Benjamin, 17 FSM R. 1, 4 (App. 2010); Christian v. Urusemal, 14 FSM R. 291, 294 (App. 2006); FSM v. Udot Municipality, 12 FSM R. 29, 39 (App. 2003); Fritz v. National Election Dir., 11 FSM R. 442, 444 (App. 2003); Mwoalen Wahu Ileile en Pohnpei v. Peterson, 20 FSM R. 632, 639 (Pon. 2016); Kallop v. Pohnpei, 18 FSM R. 130, 133 (Pon. 2011); Lee v. FSM, 18 FSM R. 106, 108 (Pon. 2011); FSM v. Koshin 31, 16 FSM R. 15, 21 (Pon. 2008); Sipos v. Crabtree, 13 FSM R. 355, 362, 365 (Pon. 2005)

The court is at a loss to figure out how an entity that claims to own certain property would not have standing to sue another for what it perceives as wrongful interference with its property rights. The court must therefore reject this contention. The plaintiff is a corporation. It was duly incorporated, and, as such, has the legal ability to own personal property. The business equipment the plaintiff claims was wrongfully seized is personal property.

The defendants contend that since the plaintiff does not hold a valid foreign investment permit, it, as an entity with foreign ownership, cannot possibly operate a business on Pohnpei. The plaintiff’s legal inability to engage in business on Pohnpei is not a legal impediment to its ability to own personal property on Pohnpei (although its inability to legally conduct business on Pohnpei could be a persuasive indication that any equipment used to conduct a Pohnpei business was, in fact, not owned by it, but owned by another).

IV. FAILURE TO STATE A CLAIM

A. Nature of Motion

The defendants’ motion to dismiss included as supporting exhibits, a foreign investment permit; a September 23, 2016 order in FSM Social Security Administration v. Roslyn Reyes, individually and d/b/a Pohnpei Arts and Crafts, Civil Action No. 2012-015; Pohnpei Arts & Crafts, Inc.’s May 4, 2016 Notice of Appearance and Motion for Return of Seized Properties in Civil Action No. 2012-015; FSM Social Security Administration’s May 20, 2016 motion in Civil Action No. 2012-015; several other Social Security filings from Civil Action No. 2012-015; and counsel’s affidavit. The plaintiff’s opposition included exhibits of its certificate of incorporation, its Kolonia Town business license, and its FSM Social Security employer identification number. These are matters that are outside the plaintiff’s pleading.

When, on a motion to dismiss for the failure to state a claim upon which relief can be granted,

matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

FSM Civ. R. 12(b); see also Palasko v. Pohnpei, 20 FSM R. 90, 93 (Pon. 2015); Win Sheng Marine S. de R.L. v. Pohnpei Port Auth., 20 FSM R. 13, 17 (Pon. 2015); Arthur v. Pohnpei, 16 FSM R. 581, 593 (Pon. 2009); Annes v. Primo, 14 FSM R. 196, 200 (Pon. 2006); Berman v. Santos, 7 FSM R. 231, 235 (Pon. 1995). Since no reason to exclude the parties’ exhibits is apparent, the court must treat the defendants’ Rule 12(b)(6) motion to dismiss for the failure to state a claim as a motion for summary judgment.

B. Motion’s Merits

The defendants contend that the court has already adjudicated the merits of the plaintiff’s claims and rejected them when the plaintiff raised those claims in the post-judgment proceeding against Reyes. The defendants further assert that since the plaintiff does not hold a foreign investment permit of its own, the business operation, and the business equipment, remained, as a matter of law, a part of Reyes’s sole proprietorship. Essentially, the defendants’ position is that the plaintiff’s claims are barred by the collateral estoppel doctrine.

Collateral estoppel is:

1. The binding effect of a judgment as to matters actually litigated and determined in one action on later controversies between the parties involving a different claim from that on which the original judgment was based. 2. A doctrine barring a party from relitigating an issue determined against that party in an earlier action, even if the second action differs significantly from the first one.

BLACK’S LAW DICTIONARY 298 (9th ed. 2009).

The plaintiff contends that the court has not already adjudicated, in Civil Action No. 2012-015, the merits of its claims in this case. It notes that it, the corporation, was not the defendant in Civil Action No. 2012-015, and that the defendants, other than the FSM Social Security Administration, were not parties in Civil Action No. 2012-015, and, that based on Social Security’s seizure of the property, Pohnpei Arts & Crafts, Inc. has other causes of action against those defendants that were not raised in Civil Action No. 2012-015.

In the FSM, a litigant that has previously litigated and lost its claim to a legal interest in certain property is collaterally estopped from claiming damages as a result of loss of ownership or possession of the property because, under the principle of collateral estoppel, a cause of action which could have been litigated in the course of the original case between the same parties is treated as litigated and decided with the former cause of action. Nahnken of Nett v. United States (III), 6 FSM R. 508, 516 (Pon. 1994), aff’d, 7 FSM R. 581, 586-87 (App. 1996).

The plaintiff, Pohnpei Arts & Crafts, Inc., made a post-seizure (and post-judgment) appearance (and tried to intervene) in Civil Action No. 2012-015, seeking the return of the same property that they seek the return of in this case. That court, in Civil Action No. 2012-015 determined that Pohnpei Arts & Crafts, Inc. did not have a right to the property that it claimed to own and that it sought returned. Since Pohnpei Arts & Crafts, Inc.’s rights to the property sought returned have already been adjudicated in an action in which the FSM Social Security Administration was the adverse party, and since its claim was found deficient, collateral estoppel bars its claims against the FSM Social Security Administration, in this case. Therefore summary judgment will be granted in the FSM Social Security Administration’s favor. Since all of Pohnpei Arts & Crafts, Inc.’s claims against the other defendants are dependent on it succeeding on its claim against the FSM Social Security Administration, Pohnpei Arts & Crafts, Inc., as a matter of law, cannot succeed on those derivative claims either. Thus, although this second action differs significantly from the first one, the defendants are also entitled, as a matter of law, to summary judgment in their favor.

Accordingly, summary judgment is granted in the defendants’ favor and this case is hereby dismissed.

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